Fresh Ideas to Address China’s Rising Foundational Chips Industry
As Jimmy Goodrich, advisor at RAND, has recently written: “China is building an immense number of legacy chip factories as evidenced in skyrocketing chip tool imports and sales. However, there are indications that China is building more supply than demand, which has stirred fears of oversupply in western capitals. Already, Chinese foundries are engaged in a price war with their domestic competitors that has spilled over to impact similar firms in Taiwan and South Korea.”
Why care?
- Growing Chinese capacity impacts Western firms’ future willingness to invest. Western firms are already facing calls to reduce capital expenditures in the face of projected pricing pressures.
- Increased Chinese chip exports to the West raises economic and data security risks as Western manufacturers grow increasingly reliant on Chinese components.
- One powerful force keeping peace across the Taiwan Strait is that, today, knocking Taiwan’s chipmakers offline would be highly costly to China and the U.S. As China builds out its domestic chipmaking capabilities, confidence in “mutually assured economic destruction” as a factor pushing all sides toward peace may decline.
What steps, if any, should the U.S. take to address China’s growing global share of legacy chip manufacturing?
The Federation of American Scientists, Noahpinion, ChinaTalk, and Chris Miller of Chip War are excited to launch a policy proposal contest to source clever ideas on how the U.S. government should respond.
Key angles to explore:
- Defining the problem: which theories of harm for China’s legacy industry are the ones the US should take most seriously?
- Prioritizing remedies: which mix of potential actions, both on the supply and demand side, would most effectively address the identified concerns?
Strong submissions should run at least 2000 words. For some inspiration on writing structure, see the memos from the Day 1 Project. Submit by July 15th for a shot at the $1000 prize pool. The best submission will get interviewed on ChinaTalk about their idea and receive a write-up from Noah.
For more introductory context, check out the Rhodium Group’s great explainer of market dynamics as well as potential U.S. government tools.